Consumers upbeat, but still holding onto wallets

Consumer confidence in Canada is on the upswing, but it may not be enough to benefit retailers for this Christmas shopping season.

The Conference Board of Canada’s latest survey of households shows overall confidence rose 3.9 points to 83.6, the second monthly uptick and sufficient to wipe out declines during the summer.

But on the question of whether now was a good time to make a large purchase — such as a home, car, or major appliance — almost half of respondents said no, and the balance of opinion on the question shifted negatively.

The finding is consistent with a new report by the Bank of Montreal, also released Wednesday, that nearly half of Canadians plan to cut back on holiday spending this year, and 48 per cent expect to spend less than they did two years ago.

The majority of respondents in the BMO survey estimated their holiday spending will peak at $1,300, with gift purchases outdoing entertaining family and friends in the size of outlays.

Only 20 per cent said they planned to spend more than two years ago.

“Despite low interest rates, the holiday shopping season this year will be a somewhat more subdued affair than last year, though sales growth should remain healthy,” said BMO economist Sal Guatieri.

Statistics Canada reported this week that retail sales rose 0.6 per cent in September, a relatively healthy gain after a slow summer.

In the latest consumer confidence survey, which was conducted in early November, Canadians said they were more hopeful about their future finances and job prospects.

After a series of declines, the share of respondents who said they expected future job opportunities to increase completely reversed, with the balance of opinion turning positive for the first time since July.

As well, the number of households who thought their finances would improve over the next six months rose to the highest level in six months, although at about 25 per cent the portion remains below what it was at the beginning of the year.

On a regional basis, opinions diverged.

British Columbia, Ontario and Atlantic Canada all registered increases in consumer confidence, while Quebec and the Prairie Provinces showed marginal decreases.

The survey was conducted between Nov. 4 and Nov. 14 and is said to have a margin of error of plus or minus 2.2 per cent.